Ahead of this afternoon's Q2 report, STMicroelectronics (STM-0.7%) announces it's investing €1.3B ($1.7B) through 2017 on R&D for CPUs that will go into a variety of mobile and embedded devices. The French government, which together with the Italian government owns 27.5% of STM, will be contributing €600M to the project, in tandem with regional/municipal authorities. (PR)

ARM's (ARMH+3.7%) Q2 royalty revenue should be in a range of $117M-$134M, largely favorable to a $119M consensus, argues BofA/Merrill in a note that helped shares continue their recent rally. ARM's royalty growth has been fueled both by higher royalties per mobile processor sales (thanks to the adoption of dual/quad core processors, Cortex, and Mali), and by rising shipments of low-cost embedded chips. STMicroelectronics (STM) recently announced an ARM-based microcontroller that sells for just $0.32. Q2 results arrive on July 24.

Apple suppliers haven't responded well to Jefferies' note about high iPhone channel inventories, build order cuts, app processor production cuts, and memory reallocations. CRUS-4.4%. OVTI-5.7%. SWKS-3.5%. RFMD-3.5%. STM-3.9%. NTE-4.6%. NXPI-5.4%. InvenSense (INVN-7.4%), which isn't yet an Apple supplier but is expected to be one soon, is also off sharply.

InvenSense (INVN-1%) is "likely shut out of the iPhone opportunity this year," says Maxim's Ashok Kumar, countering several reports claiming the opposite. Kumar, who's still reiterating a Buy, says checks point to the iPhone 5S using most of the components found in the iPhone 5, which suggests current motion sensor suppliers STMicroelectronics (STM) and AKM won't be kicked out. However, he adds checks do point to a next-gen Nexus 7 design win for InvenSense, and considers a next-gen iPad Mini win possible. InvenSense only fell in line with the market today, which suggests investors (like many of Kumar's peers) are still expecting a 5S win.

Apple is ramping as an InvenSense (INVN+5.4%) customer and the Sep. quarter will be an inflection point for sales, says Piper in a note giving a lift to the motion sensor maker's shares. Pac Crest, Wedge Partners, and most recently Goldman have already reported of an iPhone 5S design win for InvenSense; Goldman added it thinks InvenSense "holds a cost advantage and a clearer roadmap for advanced products" than archrival and historical Apple supplier STMicroelectronics (STM), and also raised the possibility of iPad and low-cost iPhone design wins.

STMicroelectronics (STM) rises 4.4% in Paris after CEO Carlo Bozotti tells Le Figaro that he is targeting order growth of 5-10% this year following an increase of 5% in Q1. The plan is to eventually achieve annual turnover of $9B (the figure was $8.49B in 2012). Bozotti notes that every 1% change in the euro-dollar rate "has an impact of €35M on operating profit per year."

ST-Ericsson (STM, ERIC) manages to sell its mobile connectivity/GPS chip business/IP to an unnamed "leading semiconductor company" for an undisclosed price. That allows the JV, whose baseband processor ops have posted huge losses, to save a bit of face as it winds down following a failure to secure a buyer for the entire unit. STM+2.6% and ERIC+4.3% as European equities rally.

STMicroelectronics (STM+2.1%) makes new 52-week highs after JPMorgan starts coverage with an Overweight. Investors have been encouraged by the margin gains posted by the European chipmaker as it winds down its money-losing ST-Ericsson JV, and also by relatively healthy set-top/TV and microcontroller chip sales.

InvenSense (INVN+4.6%) will gain Apple as a client this year and will also be designed into Samsung's Galaxy Note 3, says Pac Crest in a note that's lifting shares. On Monday, Wedge Partners, which in the past has said checks point to an iPhone 5S design win, said initial Apple shipments could happen in Q2, and that InvenSense is part of a reference design for MediaTek's 6589 quad-core processor, something that has led to a design win with growing Chinese smartphone vendor Xiaomi. Also: InvenSense filed a fresh lawsuit against archrival STMicroelectronics (STM+1.7%) yesterday.